SOUTH AFRICA PLAN TO SELL ARMS TO LIBYA
Nic Dawes

Mail & Guardian Online, South Africa
May 19 2006

Denel CEO Shaun Liebenberg hopes to provide Libya and Turkey with
Rooivalk helicopters

Planned weapons sales to previously taboo customers, such as Libya and
Turkey, are part of the package of measures adopted by the troubled
parastatal defence conglomerate Denel to turn around persistent losses
and declining sales.

Briefing Parliament’s portfolio committee on public enterprises on the
status of his turnaround plans for the company, CEO Shaun Liebenberg
said new markets were opening up as the company won improved political
backing for its marketing efforts and sought more flexibility from the
National Conventional Arms Control Committee (NCACC), which regulates
arms exports, ostensibly limiting sales to repressive regimes and
conflict zones.

The company will record a loss of about R1billion for the 2005
financial year, he said. “There are markets where I can go right now
and get R1billion worth of business, but those markets are closed
to us for very good reasons,” he said. Other markets, however, were
closed for what he described as “legacy” reasons. Libya, which is
enjoying dramatically improved diplomatic relations with the West
as its dictator Moammar Gadaffi opens it borders and oil fields to
foreign investment, is one potential customer.

A more immediate prospect, however, is Turkey, where Denel hopes to
conclude the first major sale of its hi-tech attack helicopter, the
Rooivalk, despite persistent concerns from human rights organisations
over the use of helicopters by Turkish forces in suppressing internal
dissent. This deal, worth between R12billion and R15billion, would
rescue the Rooi-valk programme from commercial oblivion. Despite
its impressive capabilities, the helicopter has been unable to find
international customers in competition with European and United
States alternatives.

“Technically, we are looking very good,” Liebenberg told the committee,
but he warned that Turkey might feel constrained to buy from a European
country, given the support it needs in its quest for European Union
accession. The deal is already being used to apply political leverage
in the increasingly bitter stand-off between Turkey and France.

Denel is competing against the Franco-German firm Eurocopter, which
manufactures the Tiger, Italian firm Augusta with its a-129 Mangusta
and Russia’s MI-28 havoc. It narrowly lost out to Eurocopter in a
bid to sell the Rooivalk to Australia, but has been in talks with
the firm over a strategic equity partnership for aspects of its
helicopter business.

According to French and Turkish media reports, Eurocopter has sent a
strongly worded letter to French Prime Minister Dominique de Villepin,
protesting at proposed legis-lation that would make it a crime to
deny the “genocide” of Armenians at the hands of Turkish troops during
World War I.

The Bill exacerbated tensions between the two countries, which are
already at odds over French opposition to Turkish entry into the EU.

Some Turkish newspapers have said that the contract will most likely
go to Denel if the French Parliament passes the Bill, which was due
to be debated as the Mail & Guardian went to press.

Liebenberg said Turkey had traditionally been off limits because of
sensitivities about its internal situation, but the Rooivalk deal
now had backing at presidential and Cabinet level, and two ministers
would soon visit Ankara to press for a deal.

NCACC approval for this transaction, should it happen, has not yet
been sought, said Liebenberg, but he is confident that the political
backing of the Presidency and Public Enterprises Minister Alec Erwin,
who sits on the committee, is in place.

Turkey has, since 1996, sought to conclude a major helicopter
purchase to assist in its crackdown on the activities of Kurdish
separatist rebels in the east of the country. A previous deal to buy
145 King Cobra helicopters from the American firm Bell Textron ran
into intense international opposition over human rights concerns,
and the US ultimately withdrew its bid on the grounds that it was
dissatisfied with the tender conditions.

Amnesty International has been protesting since the mid-1990s about
the use of military helicopters for both transport and attack purposes
in operations that have apparently targeted civilians in remote parts
of the country. It has repeatedly said helicopter exports under these
circumstances violate international law.

South Africa’s National Conventional Arms Control Act prohibits the
export of military equipment if there is a risk it will be used in the
violation of human rights. Sales to Libya, where economic opening has
not been accompanied by democratic reforms, may also attract scrutiny.

Denel has often expressed frustration in the past with the approvals
process at the NCACC, which is charged with applying the provisions
of the Act, but Liebenberg says the company is working much better
with the committee now as government support for his restructuring
plan becomes more coordinated.

The committee, chaired by Minister of Provincial and Local Government
Sydney Mufamadi, is supposed to report annually to Parliament on
weapons exports. Its 2004 report is more than a year overdue and
2005 statistics, which were due at the end of March, have yet to
be tabled. It has been criticised in the past for allowing sales to
countries with poor human rights records or messy internal conflicts.

Denel is restructuring into a holding company with focused subsidiaries
working in areas such as missile technology, aircraft components,
optical systems and artillery. Equity in each of these is likely to
be sold to international partners with the heft to assist in market
access and the capital to help scale up production.

As the M&G has previously reported, the government has agreed to
provide about R5,1billion to recapitalise Denel and rescue it from
bankruptcy over the next three years.

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